“Insurance” Industry AnalysisPresentations

BY: VINOD BODHPGDM-IV

INTRODUCTION TO INSURANCE

Equitable transfer of the risk of a loss from one entity to another in exchange for payment

Hedge against the risk of a contingent, uncertain loss.

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The insured, or policyholder: Person or entity buying the insurance policy.

The amount of money to be charged for a certain amount of insurance coverage is called the premium. 

Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

OVERVIEW OF INSURANCE INDUSTRY

Early methods:By Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively

The Babylonians developed a system which was recorded in the famous Code of Hammurabi, 1750 BC, and practiced by early Mediterranean sailing merchants

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Modern insurance:Property insurance  can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 houses.

in 1681, economist Nicholas Barbon and eleven associates established the first fire insurance company, the "Insurance Office for Houses", at the back of the Royal Exchange to insure brick and frame homes. Initially, 5,000 homes were insured by his Insurance Office.

Insurability

Risk which can be insured by Insurance companies typically shares common characteristics:-

Definite loss

Accidental loss

Insurance industry in India:

Insurance in India refers to the market for insurance in India which covers both the public and private sector organizations

IRDA is the regulatory body for insurance sector in India

Industry structure

By Feb 25, 2015 Indian Insurance is a US$40.26 billion industry

Only two million people (0.2% of the total population of 1 billion) are covered under MediClaim.

LIST OF INSURANCE COMPANIES IN INDIA

General insurance companies

Public SectorUnited India Insurance Comp. Ltd.New India Assurance comp. Ltd.National Insurance CompanyThe Oriental Insurance CompanyLife Insurance Corporation of IndiaAgriculture Insurance Company of India Ltd.

Private Sector Co.

Bharati AXA Insurance Company Bajaj Allianz General Insurance Company Cholamandalam MS General Insurance Company Future Generali Insurance Company HDFC ERGO Insurance Company ICICI Lombard IFFCO Tokio Liberty Videocon General Insurance Co Ltd L&T Insurance Company Magma HDI Insurance Company Raheja QBE Insurance Company Reliance General Insurance Royal Sundaram Alliance General Insurance Shriram Insurance Company SBI General Insurance Company Tata AIG General Universal Sampo Insurance Company

Life insurance companies

Public Sector

Life Insurance Corporation of India

Private Sector

Edelweiss Tokio Life Insurance Co. Ltd. AEGON Religare Life Insurance Aviva India Bajaj Allianz Life Insurance Kotak Mahindra Old Mutual Life Insurance TATA AIA Life INSURANCE Reliance Life Insurance Star Union Dai-ichi Life Insurance HDFC Standard Life Insurance Company Limited IDBI Federal Life Insurance IndiaFirst Life Insurance Company Birla Sun Life Insurance Max Life Insurance[2]

ICICI Prudential Life Insurance Company Canara HSBC OBC Life Insurance Company Pvt Ltd. BHARTI Axa life insurance company Exide Life Insurance company Ltd L&T general insurance co LTD SBI Life Insurance Company DHFL Primerica life insurance

Health insurance companies

Apollo Munich Cigna TTK ICICI Lombard Max Bupa Health Insurance Company Star Health and Allied Insurance Religare health insurance E-Meditek Medi Assist MD India Medsave Paramount Health care Services ICICI Prudential ICICI Lombard Vipul Medcorp United Health care Parekh HDFC Ergo Family Health Plan Ltd. Dedicated Healthcare Services  

Re-insurance companies

Public Sector 

Government of India Fully owns 1 company: GIC Re

Types of insurance

Auto insuranceGap insuranceHealth insurance Accident, sickness, and unemployment

insuranceCasualtyLife

SWOT Analysis of Insurance Sector

STRENGTHS:

• New Products• Business Growth• Rise in per capita Income• Emerging Middle Income

Group

WEAKNESS:

• Low investment• Dominance of Public sector• Promotion as a Barrier• Old tariff structure• Limited facilities

OPPORTUNITIES:

• Creation of stronger demand• Strong future growth• Rise in Income and

Awareness• Health insurance

Threats:• The political environment is not

conducive to constructive change

• The dominance of entrenched players who make industry stagnate.

• The legal framework, bureaucracy and financial infrastructure worsen the insurance business environment

Porter’s Diamond Model

Results of the Michael Porter’s Diamond Analysis of Competiveness

Demand conditions: nature of home demand.

Factor conditions: nation’s position in factors of production such as skilled labor force and infrastructure.

Firm strategy, structure, and rivalry: how companies are created, organized, managed and the nature of domestic rivalry.

Related or supporting industries (RSI): presence or absence RSI that are internationally competitive.

Two additional variables: government and chance.

The development of Insurance Industry:

The development of insurance industry can be divided into three stages:

Resumption and restoration,.Market-oriented reform, andOpening up and rapid growth.

Future prospect of Insurance Industry

Globalization has had a profound impact in shaping the insurance industry.

The near future of insurance industry sees a significant rise in share as more and more service providers both Indian and global target new segments and provide low cost, flexible solutions to customers

 Over the years, verticals like manufacturing, telecom,

banking, finance and lately the retail, have been the growth drivers for this sector. But it is very fast getting clear that the future growth of insurance sector will be fuelled by the verticals of change in the mind set of people towards need of insurance for future risk minimization and coverings.

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